Crystal ball

2021, just as 2020 has been a challenging year for the maritime industry. The global heath crisis still continues to disrupt the supply chain and has showed what a devastating impact one specific event can have. We also had the Evergiven incident that clearly showed how fragile our Just In Time economic model actually is. And finally we had several cyber-attacks specifically targeting maritime companies. It are thus still turbulent times for the maritime industry and more challenges seem to be ahead in the future such as increased piracy and net-zero.

On the other hand, not everybody has wasted this crisis to find new opportunities. Shipping line companies are announcing record breaking profits and container terminals worldwide are showing more throughput than ever.

Especially these companies that already had a high level of digitization benefited from the this health-crisis. Companies and organisations that work in a highly-digitised environment, have been able to more easily scale up (or down), to accommodate the changing logistics flow. Also because they are mainly working digitally, these organisations are less dependent on human contact and therefore are less affected by the pandemic. The flip side of this coin is that this makes such organisations more vulnerable to possible cyber-attacks.

Now talking about digital, the pandemic not only affected the operations of ports and terminals, it also has had a great impact on the logistics chain. Due to lockdowns, and restrictions on travel and shopping, people moved to on-line shopping and shifted their leisure expenses from traveling and dining to DIY, and other home-bound goods. This means that especially small local shops, cinemas, hotels, restaurants airline carriers suffered largely from the pandemic while companies such as Stanley B&D or Netflix saw their revenue increase drastically. Due to booming e-commerce, goods are now not so much distributed anymore over a multitude of smaller shops, but are now consolidated in large depots from which the goods are shipped to the customers within a region or country. E-commerce companies as Bol.com, Coolblue, Wallmart, Best Buy and Amazon have seen their income surging over the last 24 months. But also companies such as FedEx, UPS and DHL and also real-estate companies specialized in building and renting warehouses have seen their profits sky-rocking. Ok, you are right, profits of Amazon dropped 50% over the last quarter, but that was mainly due to increased shipping costs, and their investment in new additional warehouses.

It is therefore very interesting to see that for example Amazon is building their own containers and is chartering their own ships. On the other side of the spectrum, large terminal operators and shipping companies are making their way into the landside logistics, hence offering and ensuring E2E supply chain solutions. So did DP World recently buy logistics specialist Syncreon and PSA bought BDP International, a US-based logistics solution provider. But also CMA-CGM and Maersk did some take-overs with the excess of cash generated by the pandemic, also to secure their position within the new market of global E2E logistics providers.

The imbalance between supply and demand due to the pandemic as well as the Suez canal incident, has put the maritime industry under stress. Due to government spending, worldwide overall consumption has been kept under control, though leisure expenditure has greatly shifted to more home-bound goods and services. What is a danger though in the mid-term is the effects of this stress on the economy in general. In order to try to regain balance, not only production costs but also shipping costs (especially between China and Europe) have risen astronomically which has its effect on consumer pricing. Globally inflation is therefore on the rise. But the question is, is all this sustainable? Unemployment has been mainly artificially countered by massive governmental interventions. Increased prices also mean increased costs, also for employers. What will happen when things return to normal and governments stop their financial interventions?

Another question we should dare to pose ourselves is whether our economy hasn't become too dependent on one single country? Shouldn't we put our eggs in more than one basket? Also, many ports are currently looking at port call optimisation to reduce their environmental footprint, but should we actually have everything manufactured in one part of the world before shipping thousands of miles across the globe? What about near-shoring or even on-shoring? Some large companies are already looking in this direction.

It is clear that it have been very interesting months and it looks like that the future looks to be eventful as well. I'm very curious to see how the shipping industry will evolve depending on the geopolitical and global economic developments. I do not have a crystal ball but my guess is that the pendulum is about to swing the other way...

What is your prediction?